Fred Goodwin won’t give RBS pension back

Sir Fred Goodwin, 50, the former head of Royal Bank of Scotland, has come out fighting in the row over his £16m pension pot. As reported here, when Goodwin, who was sacked by the company last year when it became apparent the bank had lost more than £24bn under his watch, the largest in British corporate history, he still retained his pension rights, which amount to more than £13,000 a month until the day he dies.

Needless to say, when this arrangement was revealed by the BBC's Robert Peston on Wednesday all hell broke lose. Yesterday, the chancellor, Alastair Darling, meekly asked for him to hand some of the money back, as did the new chairman of RBS, Sir Philip Hampton. But Goodwin, known as 'Fred the shred' because of his penchant for slashing jobs at RBS, is having none of it.

By way of countering these demands, he wrote to Lord Myners, Gordon Brown's minister for the City, claiming that he wasn't handing back a penny and pointing out that it was Myners who personally agreed an £8m increase in his pension pot, bringing it to £16m, when he stood down as chief executive of RBS last year.

"I am told that the topic of my pension was specifically raised with you by both the chairman of the group remuneration committee and the group chairman, and you indicated that you were aware of my entitlement and that no further 'gestures' would be required," wrote Sir Fred.

He might have added that his pension is pocket money in comparison to that of Larry Fish, the former head of RBS’s sub-prime-hit US arm, RBS America, who enjoys a pension worth £1.4m a year (approximately £27,000 per week) after stepping down in the wake of the near nationalisation last year.

Lord Myners vehemently disputes this version of events and said the decision not to volunteer a cut in his pension was "unfortunate and unacceptable". He claims the Government only became aware of the deal last week and that UK Financial Investments, the largest shareholder in RBS, was looking at clawing back "some or all" of the pension.

However Stephen Hester, who replaced Goodwin at RBS and was a non-executive director of the bank at the time, said Goodwin's pension payment was agreed during a frantic weekend of talks in October as RBS teetered on the edge of collapse. "All the terms of Fred's departure were the subject of discussions between the chairman [then Sir Tom McKillop], the senior independent director [then Bob Scott] and the Government over that weekend," he said.

But Chancellor Darling also insists the decision to approve the pension was taken by the former RBS board before the Government took control in December. He said: "This agreement was not negotiated by the Government, nor was it approved by the Government - nor would it have been, because the agreement in relation to the remuneration, the pension arrangements between employees of a bank, are a matter between that employee and the board of directors." ·